OTTAWA — A federal cabinet minister has called out the defence industry for failing to make more than $5-billion in investments into the Canadian economy that had been promised as a condition for winning military contracts.

Defence companies are required to undertake an equivalent amount of business activity in Canada as the original contracts are worth — meaning they must make up whatever they outsource to foreign firms in work, supplies and services.

This business activity can take a variety of forms, including sharing technological developments with Canadian companies, investing money into academic research, or purchasing parts and services from a Canadian company for another project.

Related

But Public Works Minister Diane Finley revealed Wednesday that one quarter of the $23-billion in commitments made by defence companies by the end of 2011 remained unfulfilled.

And that number is undoubtedly higher when more recent years are taken into account.

Finley, who was unveiling a new federal defence procurement plan, did not name the companies with outstanding obligations.

But she said the government “will make companies publicly accountable for what they propose so that we have transparency in regard to investments that are being made.”

Obviously if you’re trying to get an economic benefit, you want to make sure it actually materializes

The new defence procurement plan includes several changes to the way companies commit to investing in Canada, as well as a public reporting requirement that Finley said “will help ensure that benefits are actually realized, as promised.”

David Perry, a defence analyst with the Conference of Defence Associations Institute, said fixing the problem will be key if the government wants to really see $240-billion in planned defence spending benefit the country.

“Obviously if you’re trying to get an economic benefit, you want to make sure it actually materializes,” he said.

A Public Works report published in February 2013 anticipated an additional $60-billion in commitments would be made between 2012 and 2027 thanks to new procurement projects — though it also warned that many of those commitments would go unfulfilled.

Tim Page, president of the Canadian Association of Defence and Security Industries, which represents about 1,000 defence companies, described the previous system as a “blunt instrument” that had several problems.

He anticipated the new defence procurement plan will result in greater benefits to both Canadians and the country’s defence industry, which often uses such investments to increase their own competitiveness.

It wasn’t immediately clear whether the government’s new procurement plan will include stiffer penalties for companies that renege on their commitments, which Page said was 10 per cent of unfulfilled investments.